EDITORIAL COMMENT: Barclays exit: Stability needed

BARCLAYS’ presence in Zimbabwe was never a flirtation.
The bank opened in the country, then a British colony, 105 years ago and became a permanent feature on the economic landscape.

But it all came to an end last week with the announcement that the British firm had sold its interest in Zimbabwe to a Malawi-listed lender, First Merchant Bank (FMB).

Barclays Plc’s intention to exit Zimbabwe as part of a broader recalibration of its footprint away from Africa had been announced in March 2016. The only question related to who would land the prized asset.
The choice of suitor had split Barclays Bank Zimbabwe between management and low-level workers.
Management had reportedly put their own bid for the local company, which had been rejected by Barclays Plc when it entered exclusive talks with FMB.

By last week, low-level managers had launched a court challenge seeking to stop Barclays Plc from selling to FMB or any other party and to force the British bank to give Zimbabwe workers the right of first refusal.
That court challenge may now become an exercise in futility since the purchase by FMB is now a done-deal only awaiting regulatory approval.

There are suggestions the Reserve Bank of Zimbabwe had long sanctioned the suitor before Barclays engaged FMB in talks.

True, Barclays Bank Zimbabwe, which has US$476 million worth of assets, had become an iconic brand with a large customer base.

It is a stable financial institution and was the go-to bank for depositors fleeing risk in a market where more than 20 financial institutions have twisted in the wind since the start of the millennium.
But that brand, represented by the eagle, will soon soar away and in its place will sit the FMB logo. This is a reality those who had gone to court to oppose the bid will now have to accept.
FMB has acquired a good asset. It has an obligation to protect it.

It has also inherited an able workforce which has managed to preserve value and made the asset a good takeover target. These, including the 63 who went to court to oppose the acquisition, should also be protected.
Barclays has indicated that it will transfer all of the bank’s 700 employees, 25 retail branches and five corporate service centres in Zimbabwe, to FMB.

It may be worth pointing out that the other critical asset will be the depositor, without whom the bank will fail.
The depositor will need assurance that deposits will remain safe after this transaction and that they can trust the new owners with their money.